Emini and Forex Trading Update:
Wednesday June 19, 2019
I will update again at the end of the day.
Pre-Open market analysis
Today’s 11 am PST FOMC announcement is unusually important. It could quickly lead to a new all-time high this week or a sharp reversal down.
Traders should trade today in 2 pieces. What takes place before the report will probably be overwhelmed by the report.
The bulls want follow-through buying after yesterday’s strong rally on the open. Despite that rally, yesterday spent most of the time in a trading range. This is just like the prior 4 days. It increases the chance of mostly trading range trading ahead of today’s report.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex session. In addition, the overnight range has been small. Furthermore, most of the trading over the past 5 days has been within trading ranges. That will probably be true again today.
Since today is an unusual day, day traders have to be ready for anything. While a strong trend is unlikely ahead of the report, if one begins, they will swing part or all of their positions.
Day traders should exit their trades before the 11 am PST report. Since the initial move on the report reverses more than half of the time, day traders should wait for at least 10 minute after the report before resuming trading.
In addition, they should be open to anything. That includes a strong trend up or down, an abrupt reversal, or a trading range. Because this report is unusually important and the daily chart is at major resistance, there is an increased chance of a big trend up or down.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course have access to a much more detailed explanation of the swing trades for each day.
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has been in a bear channel for a year and a trading range for 5 months. A trading range always has both a reasonable buy and sell setup. The bears have a double top with the April and June highs. But they need another new low to continue the bear channel.
The bulls hope the 2 week selloff will form a higher low. If so, they will have a higher low major trend reversal. It would also be a head and shoulders bottom and a double bottom pullback.
A major trend reversal with a good buy signal bar typically has a 40% chance of actually leading to a reversal to a bull trend from a bear trend. But since every reversal up and down reversed again within a few weeks, this buy setup has less than a 40% chance of success. The bulls need 2 closes above the June high to make traders think that the rally will test the March and January highs.
Today’s 11 am PST FOMC announcement is a potential catalyst for a big move up or down. That move could break to a new low and continue the yearlong bear channel. Or, it could break above the June high and make traders believe that a trend reversal might be underway.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range overnight. It is within yesterday’s range. The bars are small and have prominent tails. Day traders have been scalping for 10 pips and this will probably continue up to the 11 am report.
Day traders should exit positions before the report. There is usually a big move up or down on the report that reverses within the 1st few minutes. Day traders therefore should wait at least 10 minutes after the report before resuming trading.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course have access to a much more detailed explanation of the swing trades for each day.
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
End of day summary
The Emini was extremely quiet ahead of the FOMC report. On the report, it formed a huge bull bar and then a big bear bar. Big Up, Big Down creates Big Confusion. This typically results in a trading range, and it did today. There was a weak Spike and Channel Bull Trend and the day closed near the high.
The Emini is still deciding if the momentum up is enough to make a new high within the next week. Since today had a lot of trading range price action, like each of the past 4 days, the odds favor more tomorrow. But, because the chart is testing major resistance, there is an increased chance of a big breakout up or down at any point.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
Charts use Pacific Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Intraday Market Update page.
Hi Al, in your opinion is it better to move your stop closer to your entry when your risk starts to increase or simply take the profit and re-enter. For example if a trader bought with an initial risk of $400 looking for a measured move so a profit of $400, once the trade moves in your direction to say +$200 would you move your stop to $200 below your entry, ($400 total risk) or simply leave your stop given it is $600 away from your current price.
thanks
I don’t pay much attention to the entry price or dollars. I think in terms of legs and breakouts.
I treat every trade as if I entered it in the past second. In general, if a bull trend is strong, after every new surge, I move my stop up to below the bottom of that surge. If a trend is weaker and a deep pullback or reversal are more likely, I usually get out below a bear bar closing below its midpoint, or 4 – 8 ticks below a bull bar. I can always buy again above a bull bar in a pullback.
If the trade goes my way and the distance to my stop is big, it can create more risk than I want. I have to reduce my risk. The easiest way is to take enough of the position off so that my risk to the stop is now back to within my comfort zone.
VERY GOOD QUESTION HERE. This type of mgmt style thinking is what separates larger accounts from smaller accounts. Trading 1 or 2 regular emini contracts and trying to swing is quite difficult to manage when risk starts increasing more than 3% of account value. Al has mentioned that risking 3% of account is close to max for most traders. Therefore a $10k-20k account shouldn’t risk more than $300-$600/trade. Unfortunately for me, this has been my achilles heel, trying to decide at every moment in the trade whether or not to let my profits swing, exit at specific price points, when/how to raise my stop!